For an "easy" solution you should first stage the data in some DB table as they are. Leave the PARENT column empty for now.
Take the Loop Transformations (Preliminary Version) from the Marketplace; one of the sample cases in this package shows exactly what you need to do here, namely a recursive lookup.
Beware that the Loop Transformations as they are published on the Marketplace only work on Windows. If you need them for Unix/Linux, let me know, then I'll try to rebuild them next week; the necessary change isn't really big, but I have been drowning in work lately, so I simply didn't have the time during the past weeks to implement this (fairly small) change yet.
If you don't want to use the Loop Transformations, you can take a look at the following Velocity article:
It's very lengthy, no discussion, but the last use case shows exactly how you can perform a hierarchical lookup in PowerCenter without the Loop Transformations.
You can try to use Pipeline Lookups .
Put XML Source to mapping with it's source qualifier SQ_XMLFile.
Set lookup Source Type property to "Pipeline" (or "Source Qualifier", I don't remember exactly) and next choose your SQ_XMLFile in proper field.
Look Pipeline Lookups in Help for more details.